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Conference Call 3Q09
 

Conference Call 3Q09

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    Conference Call 3Q09 Conference Call 3Q09 Presentation Transcript

    • 3rd Quarter 2009 Results “In God we trust, nature we respect” November 16th, 2009 JBS S.A.. JBS S.A
    • Presenters Joesley Mendonça Batista CEO Jeremiah O’Callaghan Investor Relations Director 1
    • Our Values The Foundation Of Our Culture Planning Determination Discipline Availability Openness Simplicity 2
    • Agenda Our Strategy Market Overview 3Q09 Highlights Final Considerations Questions and Answers 3
    • Our Strategy 2005/2006 2009/2010 2011/2012 2007/2008 Adequate Global Sales & Value Added Global Production Financial Distribution Products & Platform Structure Platform Branding South America Fresh Products South Debt for America North America Cooked Products Working Minced Products North Australia Cured Products Capital America European Union Ready to Eat Products Equity Australia Asia Case Ready Products to Russia Global Brands Finance European Africa Marketing Union Growth Middle East Investments - Access to raw material - Integrate the sales and - High technology - High liquidity level. distribution platform to investments to produce supply globally. - Debt equalized to cash serve efficiently, local and value added products. - Leader in countries with generation. external markets, small - Increase value added surplus production. - Strong cash position. retailers, food processors, products portfolio. - Scale. - Access to international restaurants, and other - Customized products to - Leader in exports globally. capital markets to finance customers globally. each market. - Access to all meat growth. - Sales force distributed over - Convenience to consumers markets. the globe. - Development of long term day to day. - Exchange of best - Efficiency on selling the best financing plan. - Brand and Quality practices. product, to the best market, - Use of export platform to recognition and leadership. - Efficiency cost gains. with the best price. - Marketing investments to grow. - Cost reduction - Cost reduction on sales and be present in consumer - Hands-on working capital opportunities. transport. minds. management. - Margin improvements. - Margin improvements. - Margin improvements. 4
    • Our Strategy 50% Branding Value Added Products 12% Sales & Distribution 8% Platform Production Platform 4% Consolidated Cost Reduction, Average Financial Experienced Productivity, Risk EBITDA Structure Management Process Management Margin Optimization Foundation 5
    • Agenda Market Overview 6
    • Global Market Largest beef producers Largest beef consumers Others Others United States United States 31% 31% 21% 22% Brazil EU-27 15% 15% India 4% Mexico 4% Argentina Argentina 5% EU-27 Brazil China 5% China 14% 13% 10% 10% Largest beef exporters Largest beef importers Others 25% Brazil United States 23% Others 19% 38% Russia 16% New Zealand Australia 7% 19% Canada 7% India South Korea Japan 8% United States 4% EU-27 Mexico 10% 11% 8% 5% Source: USDA 2009 7
    • World Population Growth and Beef Consumption (1960 – 2050) 140 10000 Population growth, a beef consumption driver. 120 8000 100 Consumption (million tons) Population (million) 6000 80 60 4000 40 2000 20 0 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010* 2015* 2020* 2025* 2030* 2035* 2040* 2045* 2050* Population - Developed countries Population - Developing countries Beef Consumption** Source: UN (United Nations) and USDA *UN Estimates **Beef consumption trend considering CAGR of 2.0% (from 1960 to 2008) 8
    • Per capita food consumption (Kg / Year) 180 1969/ 71 160 1979/ 81 1989/ 91 140 1999/ 01 120 2030 2050 100 80 60 40 20 0 Cereals Roots and Beans, Peas Sugar O ils Crops Meat Milk and its Tubers and Lentils and its products products Source: FAO 9
    • US Beef and Veal Exports (Million Pounds) Source: USDA ERS 10
    • US Pork Exports (Million Pounds) 5,000 4,667 4,500 4,000 3,500 3,142 2,995 3,279 3,000 2,667 2,650 2,500 2,650 2,181 2,000 1,717 1,560 1,612 1,500 1,278 1,287 1,000 500 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Japan China Hong Kong Mexico Russia Canada South Korea Australia Others Until August Source: USDA ERS 11
    • US Poultry Exports (Million Pounds) 8,000 7,109 7,000 6,070 6,000 5,738 5,333 5,367 5,138 5,013 4,980 4,942 4,997 5,000 4,621 4,683 4,621 4,000 3,000 2,000 1,000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Russia China (Mainland) Iraq Mexico Canada Cuba Other Chicken Others Until August Source: USDA ERS 12
    • Brazilian beef exports (USD billion) Source Secex 13
    • Agenda 3Q09 Highlights 14
    • Highlights • Net profit of R$151.5 million in the quarter. • 7.8% net revenue growth, from R$7,771.5 million in 3Q08 to R$8,379.9 million in 3Q09. • Operating cash flow of R$317.8 million in the quarter. • Despite relevant productivity gains in international operations, the impact of the global crisis in important consumer markets resulted in margin contractions. • Efficient working capital management. • Announcement of the association with Bertin S.A. and acquisition of Pilgrim’s Pride Corp. • Commitment to respect society and the environment supported by Non-governmental organizations. 4 15
    • JBS Consolidated Net Revenue Distribution Revenue Distribution by Business Units 3Q09 Revenue Distribution by Market 3Q09 Italy Australia 5% Argentina 14% 2% Exports Brazil Pork USA 24% 17% 12% Domestic Market Beef USA 76% 50% Source: JBS Source: JBS 16
    • JBS Consolidated Exports Distribution Exports Distribution 3Q09 JBS Exports 3Q09 US$ 1,127.4 Million Others Japan Indonesia 18% 19% 3% China E.U. 4% 12% Russia South Korea USA Mexico 9% 4% 8% 7% Hong Kong 5% Africa and Middle East Canada 6% 6% Source: JBS 17
    • JBS Consolidated Results Net Revenue (R$ million) EBITDA and EBITDA Margin (R$ million) 24.0% -3.8% -0.1% -9.5% -44.0% -20.4% 81.6% -24.0% Source: JBS EBITDA Margin (%) 18
    • Currency effects in the net revenue Net Revenue (Million) • Excluding the exchange rate effect in R$ US$ the period, net revenue increased 0.6% Exchange rate over 2Q09. average of the period: 2Q09 – 2.0748 3Q09 – 1.8677 -9.5% 0.6% Source: JBS Source: Banco Central 19
    • Performance by Business Units JBS USA (Beef) Including Australia JBS USA (Pork) INALCA JBS JBS MERCOSUL Net Sales Net Sales Net Sales Net Sales (US$ billion) (US$ million) (€ million) (R$ billion) 2.9 2.8 1.8 2.8 162 144 146 1.6 1.7 1.7 2.7 2.7 143 144 1.4 3Q08 4Q08 1Q09 2Q09 3Q09 3Q08 4Q08 1Q09 2Q09 3Q09 3Q08 4Q08 1Q09 2Q09 3Q09 EBITDA (US$ mi) EBITDA (US$ mi) EBITDA (€ mi) EBITDA (R$ mi) EBITDA margin EBITDA margin EBITDA margin EBITDA margin 5.2% 6.6% 3.6% 3.8% 5.3% 5.1% 4.6% 5.6% 4.3% 4.9% 2.2% 2.2% 3.7% 3.9% 2.9% 9.7 8.3 104.6 108.4 7.6 6.6 5.6 104.1 60.4 59.7 199,1 69.4 82.6 58,2 47.3 3Q08 4Q08 1Q09 2Q09 3Q09 3Q08 4Q08 1Q09 2Q09 3Q09 3Q08 4Q08 1Q09 2Q09 3Q09 Source JBS 20 EBITDA Margin (%)
    • Debt • The net debt / EBITDA ratio increased from 2.6x in 2Q09 to 3.3x in 3Q09, reflecting the EBITDA decline when compared with 3Q08. • The company projects a reduction in leverage levels by the end of the year. • The gross and net debt reduced 5.6% and 2.2%, respectively, over 2Q09. Net Debt / EBITDA Pro Forma per Quarter Gross debt Profile (R$ million) 5,971.8 6.226.4 5,877.1 3.3 * 2.5 2.6 53% 61% 2.3 59% 2.0 47% 41% 39% 3Q08 4Q08 1Q09 2Q09 3Q09 1T09 2T09 3T09 Short term Long term Source: JBS Net Debt/ EBITDA EBITDA pro-forma * LTM including Smithfield Beef pro-forma. 21
    • Operational Cash Flow • For the second quarter consecutive, the Company generated positive operating cash flow of more than R$300 million. CAS H F L OW 3Q09 2Q09 V ar.% E B IT 210.3 296.6 -29.1% tax es -66.1 -90.4 -26.8% NOP L AT 144.1 206.2 -30.1% Depreciation 81.6 87.4 -6.7% Gross Cash F low 225.8 293.6 -23.1% W orking Capital V ariation 326.5 316.5 3.2% CAP E X -234.4 -288.0 -18.6% OP E R AT ING CAS H F L OW 317.8 322.2 -1.3% 22
    • Working Capital JBS continues to reduce its working capital needs, which decreased from 37 days in 2Q09 to 33 days in 3Q09. 2º Quarter 2009 Client’s order Product Client’s payment to JBS Delivery to JBS Production & Stock CLIENT = 37 days 21 dias SUPPLYER = 21 days 37 days Supplyer WORKING CAPITAL & payment INTERESTS 3º Quarter 2009 Client’s order Product Client’s payment to JBS Delivery to JBS Production & Stock CLIENT = 33 days 21 dias SUPPLYER = 21 days 33 days Supplyer WORKING CAPITAL & payment INTERESTS 23
    • Final Considerations • Signs of economic recovery bring the prospect of better results in coming quarters. • Turnaround of Argentine operations is under way with the change in management and the implementation of internal restructuring. • JBS maintains its focus on building a distribution platform to add value to its products and increase its margins. • The undergoing acquisition of Pilgrim’s Pride and the association with Bertin adds to the growth potential of the company. • Financial leverage continues to be our focus and we aim to keep it under control. • We are committed to building a sustainable platform respecting our customers and the environment. 24
    • IR Contacts: ir@jbs.com.br +55 11 3144 4055 www.jbs.com.br/ir Questions & Answers
    • DISCLAIMER The forward-looking statements presented herein are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management, and on information currently available to us. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Our future operating results, financial condition, strategies, market share and values may differ materially from those expressed in or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control or predict. Forward-looking statements also include information concerning our possible or assumed future operating results, as well as statements preceded by, followed by, or including the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'‘ ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or similar expressions. 26